Courts ‑‑
Jurisdiction ‑‑ Search warrants ‑‑ Offences alleged as
defined in s. 239 of Income Tax Act ‑‑ Search warrants issued
under s. 231.3 of Income Tax Act ‑‑ Application to quash ‑‑
Whether or not issuing judge had jurisdiction to review ‑‑ Whether
or not ss. 231.3 and 239 of the Income Tax Act derive their constitutional
validity from the federal government's taxing power or from its criminal law
power.

Constitutional
law ‑‑ Division of powers ‑‑ Taxation and criminal law
powers ‑‑ Offences alleged as defined in s. 239 of Income Tax
Act ‑‑ Search warrants issued under s. 231.3 of Income Tax Act
‑‑ Application to quash ‑‑ Whether or not issuing judge
had jurisdiction to review ‑‑ Whether or not ss. 231.3 and 239
of the Income Tax Act derive their constitutional validity from the federal
government's taxing power or from its criminal law power.

As a
result of alleged offences contrary to s. 239 of the Income Tax
Act, search warrants issued for appellants' premises following an ex parte
application by the Ministry of National Revenue pursuant to s. 231.3 of
that Act. Appellants brought an application to quash before the judge who had
issued the search warrants. The judge determined that he had an inherent
jurisdiction as a judge making an ex parte order to review or
rescind an ex parte order. He then considered the matter
on the merits, found that the search warrants were validly issued and dismissed
the application. The Court of Appeal dismissed the appeal and vacated the
order sealing the documents.

At
issue here was whether or not ss. 231.3 and 239 of the Income Tax
Act derive their constitutional validity from the federal government's
taxing power or from its criminal law power. If the constitutional authority
for the provisions were derived from the criminal law power, no appeal would
lie to the Court of Appeal from the decision of a Superior Court judge to issue
the search warrants because no such right of appeal was given by the statute.

Held
(L'Heureux‑Dubé, Sopinka and McLachlin JJ. dissenting): The appeal
should be dismissed.

Per Wilson,
Gonthier and Cory JJ.: The criminal law embraces acts which the law, with
appropriate penal sanctions, forbids because of some evil or injurious or
undesirable effect upon the public against which the law is directed. The
criminal law has also been defined as laws prohibiting, with penal
consequences, acts or omissions considered to be harmful to the State, or to
persons or property within the State.

The
offences described in s. 239 (fraud, deception, destruction and alteration
of documents, false statements, false documents and the wilful evasion of
income tax) are criminal in nature and are clearly harmful to the State. These
offences may be prosecuted upon indictment and substantial prison terms may be
imposed. The Act, which depends on the integrity of the taxpayer, imposes a
public duty and a breach of that fundamentally important public duty should
constitute a criminal offence. The fact that the Act is concerned with
taxation does not prevent its penal provisions from also being characterized as
criminal law.

The
jurisdiction and the procedures to be followed by a court in the application of
laws enacted by the federal government fall within the paramount jurisdiction
of the federal government. This is particularly true of criminal law. The
provisions of s. 92(14) of theConstitution Act, 1867 cannot
be construed to include jurisdiction over the conduct of criminal prosecutions.

Any
right to appeal the issuance of a search warrant under that Act must be found
within a statute. No common law right to appeal in interlocutory matters in
criminal cases exists. A right of appeal cannot be founded upon the provincial Judicature
Act, which is concerned with civil procedures, because ss. 231.3 and
239 constitute an exercise of the criminal law jurisdiction. The Income Tax
Act does not provide for an appeal from such an order.

An
accused is not without remedies. TheCriminal Code
provides wide powers for a person from whom articles are seized pursuant to a
search warrant to make a speedy application for their return. If the matter
should proceed to trial, the accused may attack the search warrant in any way
he or she considers appropriate, including the allegation that it infringes the
provisions of s. 8 of theCanadian Charter of Rights and Freedoms. If
the matter should not go to trial, a party may still seek civil damages for
compensation. No injustice arises from the absence of a right to appeal the
order issuing the search warrants.

The
fact that the legislative authority for the enactment of these statutes may
arise under both the criminal law power and the federal taxation power does not
mean that the provisions in them creating offences and imposing penal sanctions
are not criminal law. An otherwise predominantly regulatory piece of
legislation may contain criminal prohibitions and sanctions and a challenge to
specific provisions in the statute under the division of powers must be
directed at the challenged provisions, not at the statute as a whole. To the
extent the legislation makes the filing of a fraudulent and dishonest return an
offence punishable by fine or imprisonment, it is just as clearly legislation
in relation to criminal law.

It
was unrealistic, for purposes of deciding whether or not there was an appeal
from a refusal to quash a search warrant, to divorce s. 231.3 from the
offences sought to be uncovered by the search and to characterize the former as
a matter of civil procedure and the latter as criminal law. It was not
necessary to explore aspects of the case arising from the fact that
ss. 231.3 and 239 may be constitutionally justified under the general
taxing power. These sections are truly criminal in their nature, and criminal
procedure is expressly excluded from provincial jurisdiction.

Per La
Forest J.: Notwithstanding a general preference for Sopinka J.'s approach to
the juristic character of the relevant provisions, the appeal should be
dismissed. In choosing a criminal sanction and applying all the
provisions of theCriminal Code "except to
the extent that the enactment otherwise provides", Parliament has shown a
disposition to adopt the ordinary procedures of the criminal law for their
enforcement, subject to any variations spelled out in the Income Tax
Act.

Per
L'Heureux‑Dubé, Sopinka and McLachlin JJ. (dissenting): Sections 231.3
and 239 of the Income Tax Act are supportable
under both the criminal law power and the federal taxation power. Since
s. 92(14) of theConstitution Act, 1867 confers
jurisdiction on the province to legislate in respect of procedure in civil
matters, an appeal lies not only under federal legislation but also under New
Brunswick's Judicature Act. Absent conflict,
both forms of legislation are valid on the basis of the double aspect
doctrine. Provision for enforcement, including the creation of severe
penalties, does not mean that the legislation is necessarily criminal.

Provincial
procedure is not ousted because the procedures to be followed by a court in the
application of federal laws are within the paramount jurisdiction of
Parliament. The provincial courts are competent to and do adjudicate in
relation to federal law and apply their procedure unless that law prescribes
otherwise.

A
motion to review the issuance of a search warrant takes its character from
earlier proceedings out of which it arises. The motion for review cannot
therefore be characterized as exclusively criminal for the purpose of
determining rights of appeal ‑‑ no charges were laid and indeed may
not be laid. Nothing in the nature of the application can convert the
proceeding into an exclusively criminal proceeding.

Finally,
the appellants may find themselves without a remedy. If the matter should
proceed to trial (assuming charges are laid), the problems arising out of Wilson v.
The Queen, which precludes a collateral attack on an order made
by a court having jurisdiction to make it, make it doubtful that the trial
judge would have jurisdiction to set aside an order of a superior court judge.
Sections 490(7), (10) and (17) of theCriminal Code, if
applicable to a seizure under the Income Tax Act, have
no application where the search is alleged to be unlawful and it is sought to
prevent or terminate the search. If the matter does not go to trial, an action
for damages, grounded on conduct of the authorities pursuant to an order of the
superior court which had not been set aside, is highly unlikely.

John
R. Power, Q.C., and Douglas
L. Richard, Q.C., for the respondents.

//Cory J.//

The
judgment of Wilson, Gonthier and Cory JJ. was delivered by

CORY J. --
The question presented in this case is whether a Court of Appeal has
jurisdiction to hear an appeal from the decision of a Superior Court judge not
to quash a search warrant which that judge had earlier issued upon an ex parte motion
pursuant to s. 231.3 of the Income Tax Act, S.C. 1970-71-72,
c. 63, as am.

Factual
Background

On
July 5, 1986, Turnbull J. of the Court of Queen's Bench of New Brunswick heard
an ex parte application brought by officials of the Ministry of
National Revenue to issue a search warrant pursuant to s. 231.3 of the Income Tax
Act. At the conclusion of the hearing, Turnbull J. issued search warrants
for the premises occupied by Knox Contracting Ltd. as well as for the home and
garage of the corporation's President, Harold Hazen Knox. On July 22, 1986,
further search warrants were issued for the offices of their auditors. When
the warrants were executed the appellants, Knox Contracting Ltd. and its
President, brought an application before Turnbull J. seeking to quash the
warrants on the ground that they were invalid and to impound the material
seized until the disposition of the matter. On August 22, 1986, it was ordered
that all the documents seized pursuant to the warrants were to be impounded and
sealed pending a decision on the application.

Turnbull
J. considered the matter carefully. He determined that he had jurisdiction to
review the ex parte order on the ground that there is an
inherent jurisdiction in a judge who makes an ex parte order
to revoke or rescind it. He then considered the matter on the merits. He
found that the search warrants were validly issued and dismissed the
application on March 3, 1987.

The
appellants then appealed. The Court of Appeal once again ordered that the
documents be impounded and sealed pending its decision on the matter. The
court held that Turnbull J. did not have jurisdiction to review the issuing of
the search warrants. It found that while a trial judge has jurisdiction to
review his or her own orders, there was no order in existence which could be
reviewed or appealed. A distinction was drawn between the ordering of the
issuance of a search warrant and the mere act of issuing the warrant. It was
held that no order had been given and that the issuing of the search warrants
was an administrative process which could not be reviewed. The appeal was
dismissed and the order sealing the documents was vacated.

Position
of the Parties

At
the outset, the respondents very properly conceded that the Court of Appeal was
in error in holding that the issuance of search warrants was not an ex parte order.
There can be no question that the issuing of the search warrant pursuant to s.
231.3 of the Income Tax Act, must be
considered to be an order of the judge. Since it is an ex parte order,
it was properly reviewable pursuant to the inherent jurisdiction of trial
judges to review such an ex parte order. See for example, Wilson v.
The Queen, [1983] 2 S.C.R. 594. It still must be determined
whether or not the Court of Appeal had jurisdiction to review or to hear an
appeal from the review of the ex parte order.

The
appellants contended that s. 231.3 derives its constitutional validity from the
taxing power of the federal government pursuant to s. 91(3) of theConstitution Act, 1867. It is argued that the constitutional basis for the
impugned section rests upon the taxation power for the federal government and
not upon the criminal law power provided by s. 91(27). As a result, the
appellants argued that the province, pursuant to s. 92(14), had the
constitutional authority to dictate the appropriate routes, methods and
procedures of appeal. This, it was said, had been done in the present case by means
of s. 8(3) of theJudicature Act, R.S.N.B. 1973, c.
J-2, as amended, which granted jurisdiction to the Court of Appeal to entertain
the appeal.

The
respondents took the position that s. 231.3 is purely criminal in nature in
that it authorizes search warrants to obtain documents which may afford
evidence of the commission of an "offence" as defined in s. 239 of
the Act. It is said that the offences described in that section should be
considered to be criminal in nature and that, therefore, search warrants issued
to obtain evidence for the prosecution of those offences should also be
considered criminal in nature. The respondents submitted that criminal law and
criminal procedure come within the exclusive jurisdiction of the federal
government, and this must include the authority to legislate regarding
provisions for appeals.

The
respondents argued that since s. 231.3 must be considered to be criminal in
nature and no appeal procedure from the issuance of search warrants is provided
in the Income Tax Act, it is then necessary to look to theCriminal
Code to determine whether the decision may be appealed. The Code does
not provide for an appeal from an order issuing search warrants and thus it is
said the appellants cannot appeal the order of Turnbull J. If ss. 231.3 and
239 are, as I believe them to be, criminal in nature, then this submission must
prevail.

Are ss. 231.3 and 239 of the Income Tax Act in their Essence Criminal
Law?

This
appeal can be resolved by determining but one issue, namely, whether the
provisions of ss. 231.3 and 239 of the Income Tax Act are by
their nature criminal law. If they are, then no appeal lies to the Court of
Appeal from the decision of a Superior Court judge to issue the search
warrants.

These
sections of the Income Tax Act read as follows:

231.3 (1) A
judge may, on ex parte application by the Minister, issue a
warrant in writing authorizing any person named therein to enter and search any
building, receptacle or place for any document or thing that may afford
evidence as to the commission of an offence under this Act and to seize and, as
soon as practicable, bring the document or thing before, or make a report in
respect thereof to, the judge or, where the judge is unable to act, another
judge of the same court to be dealt with by the judge in accordance with this
section.

239. (1) Every person who has

(a) made, or participated in, assented to or acquiesced in
the making of, false or deceptive statements in a return, certificate,
statement or answer filed or made as required by or under this Act or a
regulation,

(b) to evade payment of a tax imposed by this Act,
destroyed, altered, mutilated, secreted or otherwise disposed of the records or
books of account of a taxpayer,

(c) made, or assented to or acquiesced in the making of,
false or deceptive entries, or omitted, or assented to or acquiesced in the
omission, to enter a material particular, in records or books of account of a
taxpayer,

(d) wilfully, in any manner, evaded or attempted to evade,
compliance with this Act or payment of taxes imposed by this Act, or

(e) conspired with any person to commit an offence
described by paragraphs (a) to (d),

is guilty of an offence and, in addition to any penalty
otherwise provided, is liable on summary conviction to

(f) a fine of not less than 25% and not more than double
the amount of the tax that was sought to be evaded, or

(g) both the fine described in paragraph (f) and
imprisonment for a term not exceeding 2 years.

(2)
Every person who is charged with an offence described in subsection (1) may, at
the election of the Attorney General of Canada, be prosecuted upon indictment
and, if convicted, is, in addition to any penalty otherwise provided, liable to
imprisonment for a term not exceeding 5 years and not less than 2 months.

As a
point of commencement, it may be helpful to consider what constitutes criminal
law. While, like a work of art, it is something that may be easier to
recognize than define, some guidelines have been established. It would be
going too far to say that a law needs only to prohibit an act with penal
consequences to be criminal. Such an overly wide definition would permit
Parliament to "colourably invade areas of exclusively provincial
legislative competence": Scowby v. Glendinning, [1986]
2 S.C.R. 226, at p. 237.

A
very helpful definition of criminal law can be found in the Reference
re Validity of Section 5(a) of the Dairy Industry Act (Margarine
Reference), [1949] S.C.R. 1. In that case Rand J. stated at p.
49:

A crime
is an act which the law, with appropriate penal sanctions, forbids; but as
prohibitions are not enacted in a vacuum, we can properly look for some evil or
injurious or undesirable effect upon the public against which the law is
directed. That effect may be in relation to social, economic or political interests;
and the legislature has had in mind to suppress the evil or to safeguard the
interest threatened.

Dickson
J., as he then was, in dissenting reasons in R. v. Hauser, [1979]
1 S.C.R. 984, defined the subject in this way at p. 1026:

Head
27 of s. 91 of the British North America Act empowers
Parliament to make substantive laws prohibiting, with penal consequences, acts
or omissions considered to be harmful to the State, or to persons or property
within the State.

Section
239 and its investigative arm s. 231.3 fall within these definitions.

Section
231.3 provides for the issuance of search warrants where they may afford
evidence of an "offence" under the Act. Section 239 describes those
offences. They are by their very nature criminal. Upon reading s. 239 the key
descriptive words spring from the page, such as: "false or deceptive
statements", "to evade payment of a tax imposed by this Act,
destroyed, altered, mutilated, secreted . . . records", "false or
deceptive entries" and "wilfully . . . evaded". The section
speaks of fraud, deception, destruction and alteration of documents, false
statements, false documents and the wilful evasion of income tax.

It
is readily apparent that those who commit these offences have deliberately
committed acts which by their very nature come well within the definition of
what constitutes criminal law. The offences described in s. 239 are
"clearly harmful to the State". The fact that these offences may be
prosecuted upon indictment and that terms of imprisonment of up to 5 years may
be imposed serves to further strengthen the conclusion that these offences are
criminal in nature.

The
criminal nature of making false or deceptive statements on income tax returns
has long been recognized. In Re Ramm (1957), 120 C.C.C.
44, the Ontario Court of Appeal considered whether the Public Accountants
Council could revoke the appellant's licence to practise after he had been
convicted of making a false or deceptive statement on an income tax return.
This was dependent upon whether the conviction constituted a "criminal
offence" under the Public Accountancy Act, R.S.O. 1950, c.
302. The court held that a conviction for such an offence under the earlier Income Tax
Act would be a criminal offence. As stated by LeBel J.A. at p. 47:

. . . we
are convinced that to make false or deceptive statements in a return filed or
made as required by either tax Act is to commit a crime, and a serious crime,
rather than to contravene a statutory law not ordinarily regarded as criminal.

It is
fitting and appropriate that the s. 239 offences be considered as criminal
law. The Income Tax Act is a major source
of funds for the federal government. Its provisions are applicable to most
adult Canadians. The vast majority pay their income tax by way of payroll
deduction with little or no opportunity for evasion or misstatement. Those who
do evade the payment of income tax not only cheat the State of what is owing to
it, but inevitably increase the burden placed upon the honest taxpayers. It is
ironic that those who evade payment of taxes think nothing of availing
themselves of the innumerable services which the State provides by means of
taxes collected from others.

The
entire system of levying and collecting income tax is dependent upon the
integrity of the taxpayer in reporting and assessing income. If the system is
to work, the returns must be honestly completed. All taxpayers have the right
to know that it is a criminal violation to commit any of the offences described
in s. 239. The Act imposes a public duty. A breach of that fundamentally
important public duty should constitute a criminal offence.

Federal
Jurisdiction Flowing from Criminal Law Authority

The
appellants submitted that the Income Tax Act must
derive its constitutional validity from the taxing provision set out in s.
91(3) of theConstitution Act, 1867 and not the
criminal law powers provided in s. 91(27). The submission is not appropriate when
considering ss. 231.3 and 239 of the Act. It is no doubt correct that the Act
is concerned with taxation, but that does not prevent its penal provisions from
also being characterized as criminal law. And for the reasons I have set out
earlier, I am convinced that ss. 231.3 and 239 are truly criminal in their
nature. They must be considered as enacted pursuant to the exclusive federal
jurisdiction in the domain of criminal law.

91. It shall be lawful for the Queen, by
and with the Advice and Consent of the Senate and House of Commons, to make
Laws for the Peace, Order, and good Government of Canada, in relation to all
Matters not coming within the Classes of Subjects by this Act assigned
exclusively to the Legislatures of the Provinces; and for greater Certainty,
but not so as to restrict the Generality of the foregoing Terms of this
Section, it is hereby declared that (notwithstanding anything in this Act) the
exclusive Legislative Authority of the Parliament of Canada extends to all
Matters coming within the Classes of Subjects next hereinafter enumerated; that
is to say, --

.
. .

27. The
Criminal Law, except the Constitution of Courts of Criminal Jurisdiction, but
including the Procedure in Criminal Matters.

92. In each Province the Legislature may
exclusively make Laws in relation to Matters coming within the Classes of
Subject next hereinafter enumerated; that is to say, --

.
. .

14. The
Administration of Justice in the Province, including the Constitution,
Maintenance, and Organization of Provincial Courts, both of Civil and of
Criminal Jurisdiction, and including Procedure in Civil Matters in those
Courts.

It
has long been held that although a court may be provincially organized and
maintained, its jurisdiction and the procedures to be followed by such a court
in the application of laws enacted by the federal government are within the
paramount jurisdiction of the federal government. This is particularly true of
criminal law.

It
is also well established that, although a court may be provincially organized
and maintained, its jurisdiction and the procedure to be followed for the
application of laws enacted by the Parliament of Canada, in relation to matters
confided to that Parliament, are within its exclusive jurisdiction. That
applies to criminal law and procedure in criminal matters which by subsection
27 of section 91 of the B.N.A. Act are subject to the legislative powers of the
Dominion.

Still
earlier, Duff J. set forth the same principle in Reference re Validity
of the Combines Investigation Act and of s. 498 of the Criminal Code, [1929]
S.C.R. 409, at p. 418:

The
authority in relation to the Criminal Law and Criminal Procedure given by s.
91(27) would appear to confer upon the Dominion, not as an incidental power
merely, but as an essential part of it, the power to provide for investigation
into crime, actual and potential.

It
has been made quite clear that the provisions of s. 92(14) of theConstitution Act, 1867 cannot be construed to include jurisdiction over the
conduct of criminal prosecutions. Laskin C.J. in Attorney General of
Canada v. Canadian National Transportation, Ltd., [1983] 2 S.C.R.
206, at p. 223 stated:

Section
92(14) grants jurisdiction over the administration of justice, including
procedure in civil matters and including also the constitution, maintenance and
organization of civil and criminal provincial courts. The section thus narrows
the scope of the criminal law power under s. 91, but only with respect to what
is embraced within "the Constitution, Maintenance, and Organization of
Provincial Courts . . . of Criminal Jurisdiction". By no stretch of
language can these words be construed to include jurisdiction over the conduct
of criminal prosecutions. Moreover, as a matter of conjunctive assessment of
the two constitutional provisions, the express inclusion of procedure in civil
matters in provincial Courts points to an express provincial exclusion of
procedure in criminal matters specified in s. 91(27).

In
that same case Laskin C.J. expressly adopted the reasons of Martin J.A. in R. v.
Hoffmann-La Roche Ltd. (1981), 33 O.R. (2d) 694, where it was held that
legislation which in pith and substance pertains to criminal procedure is
within the exclusive competence of Parliament. The investigation and
prosecution of offences under the Income Tax Act is thus
a valid exercise of the exclusive criminal law power of the federal government.

Any
right to appeal the issuance of a search warrant under that Act must be found within
a statute since at the least a right to appeal in interlocutory matters in
criminal cases does not exist at common law: Mills v. The Queen, [1986]
1 S.C.R. 863, at p. 958. However, because ss. 231.3 and 239 constitute an
exercise of the criminal law jurisdiction, a right of appeal cannot be founded
upon the provincial Judicature Act, which is
concerned with civil procedures. Nor does the Income Tax Act itself
provide for an appeal from such an order.

(2)
All the provisions of theCriminal Code relating to
indictable offences apply to indictable offences created by an enactment, and
all the provisions of that Code relating to summary conviction offences apply
to all other offences created by an enactment, except to the extent that the
enactment otherwise provides.

TheCriminal
Code does not provide for an appeal from the issuance of a
search warrant. Thus Parliament has refrained from providing for an appeal of
such an order and the Court of Appeal therefore lacked jurisdiction to hear the
appeal.

This
does not mean that an accused is left without remedies. Wide powers are
provided in theCriminal Code for a person from
whom articles are seized pursuant to a search warrant to make a speedy
application for their return. See Criminal Code,
R.S.C., 1985, c. C-46, s. 490(7), (8), (10) and (17). If the matter should
proceed to trial then of course the accused may attack the search warrant in
any way he considers appropriate, including the allegation that it infringes
the provisions of s. 8 of theCanadian Charter of Rights and Freedoms. If,
for any reason, the matter should not go to trial, a party may still seek civil
damages for compensation. No injustice arises from the absence of a right to
appeal the order issuing the search warrants.

In
summary, the issuance of search warrants is an interlocutory procedure.
Appeals from interlocutory orders by the parties in criminal proceedings must
be based upon a statutory provision. No such statutory provision exists and
thus no appeal lies to the Court of Appeal. It is appropriate that the Code
provides no avenue for appeal from these procedures, as such appeals are
neither desirable nor necessary and should not, as a general rule, be
encouraged. See Mills v. The Queen, supra, and R. v.
Meltzer, [1989] 1 S.C.R. 1764.

It
is unnecessary to consider the effect of s. 8 of theCanadian Charter of
Rights and Freedoms as no submission was advanced that the proceedings
before the judge of first instance on the issuance of the search warrants
infringed in any way s. 8.

Since
preparing the above, I have had the benefit of reading the reasons of my
colleague, Sopinka J. and would add the following observations.

In R. v.
McKinlay Transport Ltd., [1990] 1 S.C.R. 627, Wilson J. indicated, for the
majority of the Court, that the Income Tax Act, R.S.C.
1952, c. 148, was essentially administrative and regulatory in nature since it
put in place a self-reporting and self-assessing system which depended upon the
honesty and integrity of taxpayers for its effectiveness. In this respect she
carefully contrasted the Income Tax Act with the Combines
Investigation Act, R.S.C. 1970, c. C-23, dealt with in Thomson
Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive
Trade Practices Commission), [1990] 1 S.C.R. 425, and Stelco Inc. v. Canada
(Attorney General), [1990] 1 S.C.R. 617, which was essentially a policing
statute designed to uncover and punish anti-competitive behaviour.

L'Heureux-Dubé
J., relying on Attorney General of Canada v. Canadian National
Transportation, Ltd., supra, held in Thomson that
the combines legislation was supportable under the federal trade and commerce
power. Sopinka J. in the present case similarly asserts that the Income Tax
Act was passed pursuant to the federal taxing power. I take no issue with
my colleagues as to the legislative authority for the enactment of these
statutes. This does not mean, however, that the provisions in them creating
offences and imposing penal sanctions are not criminal law. The Income Tax
Act, for example, to the extent it creates a regulatory scheme for the
calculation and payment of taxes by taxpayers and authorizes spot audits to
ensure that voluntary compliance is working, is not criminal law. It is
clearly tax law. But to the extent the legislation makes the filing of a
fraudulent and dishonest return an offence punishable by fine or imprisonment,
it just as clearly appears to be legislation in relation to criminal law.
Those provisions recognize that not all taxpayers can be trusted to report
their incomes accurately and that the self-reporting and self-assessing system
has to have some teeth in it in order to deal with miscreants. While it is, of
course, possible to view these provisions as part of administration or
regulation in that they may have a deterrent effect on those disposed in the
future to stray from the straight and narrow path, they are more than that.
They deal with deliberate misconduct that has already taken place by characterizing
it as an offence punishable on summary conviction or by indictment. They are
aimed at the suppression of an evil and an injury to the public interest. In
that sense they are quintessential criminal law. There is, in my view, nothing
unusual or inconsistent about an otherwise predominantly regulatory piece of
legislation containing criminal prohibitions and sanctions and a challenge to
specific provisions in the statute under the division of powers must, in my
view, be directed at the challenged provisions, not at the statute as a whole.

In
this case the question is whether, in the absence of any right of appeal in
either the Income Tax Act or theCriminal
Code from a decision of a superior court judge not to quash
a search warrant issued pursuant to s. 231.3 of the Income Tax
Act, the province can confer such a right pursuant to its power under s.
92(14). It seems fairly clear that the purpose of the search contemplated in
s. 231.3 of the Income Tax Act is to gather
evidence of an offence under s. 239. Such offence may be proceeded on by way
of summary conviction under s. 239(1) or by way of indictment under s. 239(2)
at the election of the Attorney General of Canada. It is, in my view,
unrealistic, for purposes of deciding whether or not there is an appeal from a
refusal to quash a search warrant, to divorce s. 231.3 from the offences sought
to be uncovered by the search and to characterize the former as a matter of
civil procedure and the latter as criminal law. Thus, although ss. 231.3 and 239
may be constitutionally justified under the general taxing power, it is not
necessary for the purposes of this case to explore that aspect. These sections
are truly criminal in their nature, and criminal procedure is expressly
excluded from provincial jurisdiction: see Attorney General of
Canada v. Canadian National Transportation, Ltd., supra, at pp.
216-23.

Conclusion

In
the result, the appeal must be dismissed although for reasons that are
different from those of the Court of Appeal.

//La Forest//

The
following are the reasons delivered by

LA FOREST J. -- I
have had the advantage of reading the reasons of my colleagues, Sopinka and
Cory JJ. While I generally prefer Sopinka J.'s approach to the juristic
character of the relevant provisions, I would dispose of the appeal in the
manner proposed by Cory J. for the following reason. In choosing a criminal
sanction and applying all the provisions of theCriminal
Code "except to the extent that the enactment otherwise
provides" (seeInterpretation Act, R.S.C., 1985, c.
I-21, s. 34(2)), Parliament, it seems to me, has shown a disposition to adopt
the ordinary procedures of the criminal law for their enforcement, subject to
any variations spelled out in the Income Tax Act, S.C.
1970-71-72, c. 63. It is unnecessary to consider whether a province could, in
other circumstances, constitutionally deal with procedure respecting a penal
provision conjointly supportable under the criminal law power and some other
head of federal legislative power.

//Sopinka J.//

The
reasons of L'Heureux-Dubé, Sopinka and McLachlin JJ. were delivered by

SOPINKA J.
(dissenting) -- I have had the advantage of reading the reasons for judgment
herein of my colleague, Cory J., but I am unable to agree with either his reasons
or his disposition of this appeal.

The
appellants claim that the trial judge erred in refusing to quash search
warrants under s. 231.3 of the Income Tax Act, S.C.
1970-71-72, c. 63, as amended. Without considering the merits of their claim,
the Court of Appeal determined that the trial judge, Turnbull J., did not have
the jurisdiction to review the s. 231.3 search warrants. While the respondents
now concede that the trial judge did have such jurisdiction, they contend that
there was no appeal from the trial judge's decision.

The
issue in this appeal, therefore, is whether an appeal lies from the decision of
a superior court judge not to quash a search warrant issued pursuant to s.
231.3 of the Income Tax Act. Cory J. finds
that ss. 231.3 and 239 of the Income Tax Act are
supportable under s. 91(27) of theConstitution Act,
1867 and that appeal procedures are therefore within the
federal government's exclusive jurisdiction over criminal procedure. In his
opinion, since the Income Tax Act and theCriminal
Code are silent with respect to appeals from an order
regarding search warrants, then necessarily no appeal lies.

In
my opinion, these provisions are supportable under both the criminal law power
and the power in relation to federal taxation. Accordingly, an appeal lies
under New Brunswick'sJudicature Act, R.S.N.B. 1973, c.
J-2.

While
I accept that ss. 231.3 and 239 are supportable under the power over criminal
law and procedure, that does not end the inquiry. If these provisions are also
supportable under s. 91(3) of theConstitution Act, 1867, the
federal taxation power, then the jurisdiction to provide for an appeal is not
exclusively federal. Section 92(14) of theConstitution Act,
1867 confers jurisdiction on the province to legislate in
respect of procedure in civil matters. Accordingly, if ss. 231.3 and 239 are
supportable under two heads of power, one criminal and one civil in nature, a
right of appeal can be conferred by either federal or provincial legislation.
In the absence of conflict, both forms of legislation are valid on the basis of
the double aspect doctrine: see Multiple Access Ltd. v. McCutcheon, [1982]
2 S.C.R. 161.

The
notion that a statute is supportable under two heads of legislation is well
established: see R. v. Hauser, [1979] 1 S.C.R.
984; R. v. Wetmore, [1983] 2 S.C.R. 284. The fact that provision is made
for enforcement, including the creation of severe penalties, does not mean that
the legislation is necessarily criminal. For example, the Combines
Investigation Act, R.S.C. 1970, c. C-23, which contains provision for the
issue of search warrants and creates indictable offences, has been held by this
Court to be supportable under the trade and commerce power: see General
Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R.
641. In R. v. Hauser, supra,
Pigeon J. stated, at p. 1000:

The mere
fact that severe penalties are provided for violations cannot of itself stamp
out a federal statute as criminal law. Such is the case for most revenue
acts which are clearly a class of statutes founded on legislative authority
other than head 27. [Emphasis added.]

Similar
enforcement provisions, including powers of search and seizure, are found in
provincial taxing statutes. See Income Tax Act, R.S.O.
1980, c. 213, ss. 38 and 43. Could it be suggested that these are ultra
vires the province because they create penalties by way of
fines and imprisonment?

The
nature of the Income Tax Act is such that it
was undoubtedly passed under the federal taxation power. Most of its
provisions have nothing to do with the criminal law power. In R. v.
McKinlay Transport Ltd., [1990] 1 S.C.R. 627, we held that the Income Tax
Act is a taxation statute and not criminal in nature. Wilson J. states,
at p. 641:

Section
231(3) is not criminal or quasi-criminal legislation. The Income Tax
Act is essentially a regulatory statute since it controls the manner in
which income tax is calculated and collected. This Court pointed out in R. v.
Grimwood, [1987] 2 S.C.R. 755, at p. 756, that "the purpose
of ss. 231(3) and 238(2), when read together, is not to penalize criminal
conduct but to enforce compliance with the Act".

McKinlay dealt
with the Income Tax Act as it stood before
the amendment which added s. 231.3 in its present form -- S.C. 1986, c. 6,
s. 121. But as pointed out by La Forest J. in his reasons in Thomson
Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive
Trade Practices Commission), [1990] 1 S.C.R. 425, the offence sections do not
remove the Act from the regulatory, administrative sphere. He stated, at pp.
516-17:

All of these offences relate to conduct that might well
be discovered by the exercise of the power to order the production of documents
which s. 231(3) confers on the Minister of National Revenue. This has not
prevented this Court from characterizing s. 231(3) as a regulatory or
administrative power of investigation; see R. v. McKinlay
Transport Ltd., supra.

.
. .

. . .
the degree of privacy that can reasonably be expected within the investigative
scope of the Act is akin to that which can be expected by those subject to
other administrative and regulatory legislation, rather than to that which can
legitimately be expected by those subject to police investigation for what I
have called "real" or "true" crimes.

While
I agree with the statement of Cory J. that the procedures to be followed by a
court in the application of federal laws are within the paramount jurisdiction
of Parliament, it does not follow that in the absence of conflict, provincial
procedure is ousted. The provincial courts are competent to and do adjudicate
in relation to federal law and apply their procedure unless that law prescribes
otherwise. The contrary view would leave a huge hiatus in the procedure to be
followed because federal laws seldom specify either the court or the procedure
by which they are to be administered. In the absence of a provision in theFederal
Court Act, R.S.C., 1985, c. F-7, conferring exclusive
jurisdiction on that court, provincial courts have jurisdiction, and in that
case apply their own procedure.

Professor
P. W. Hogg, in Constitutional Law of Canada (2nd
ed. 1985), summarizes this set-up as follows, at p. 135:

The
general jurisdiction of the provincial courts means that there is no need for a
separate system of federal courts to decide "federal" questions. Nor
does the power to decide federal questions have to be specifically granted to
the provincial courts by the federal Parliament. On the contrary, if federal
law calls for the exercise of adjudication, but is silent as to the forum, the
appropriate forum will be the provincial courts.

The
learned author refers in support to Board v. Board, [1919]
A.C. 956; Laskin, "The Constitutional Systems of Canada and the United
States: Some Comparisons" (1967), 16 Buffalo L. Rev. 591,
at p. 592; and Laskin, The British Tradition in Canadian Law, at p.
114.

There
is nothing in Attorney General of Canada v. Canadian National
Transportation, Ltd., [1983] 2 S.C.R. 206, that conflicts with this view.
That case dealt with the power to legislate with respect to the prosecution of
offences under the Combines Investigation Act. Parliament had
legislated to confer on the Attorney General of Canada concurrent jurisdiction
with the Attorney General of a province over prosecution of offences under that
Act. In upholding the legislation, Laskin C.J. opined that the federal
government had exclusive legislative jurisdiction in relation to the
prosecution of all federal offences. This obiter dictum,
concurred in by three judges, has been criticized. See Hogg, supra, at p.
430. It is clear, however, that the exclusivity of federal legislation
depended on the fact that Parliament had legislated. Laskin C.J. explained why
the province did not have concurrent jurisdiction in the following passage (at
pp. 226-27):

It
is patent that neither the respondents nor their supporting interveners view
the present case as pointing to possible concurrency. Since Parliament has in
fact legislated, that would defeat their contention without more. Yet there is
good reason to say that even if there is merit in the respondents' position,
there is at least equal merit in the assertion of parliamentary authority to
control prosecution for violation of the federal criminal law. The issue, put
in these terms, is not a new one. The Privy Council explained the matter in
terms of the so-called trenching doctrine in Tennant v. Union Bank
of Canada, [1894] A.C. 31, as supporting a privileged
encroachment on provincial legislative authority to give effect to exclusive
and paramount federal power in relation to the classes of subjects assigned to
Parliament under the enumerated heads of s. 91. The obverse view
arises, as shown in the Assignments and Preferences case,
Attorney-General of Ontario v. Attorney-General of Canada, [1894]
A.C. 189, when there is an absence of federal legislation to supersede the
lawful enactment of provincial legislation within one of its assigned powers.
[Emphasis added.]

In
the present case, Parliament has not legislated and concurrency does arise.
The obverse view referred to by Laskin C.J. therefore applies.

The
operation of the constitutional scheme referred to above is illustrated by this
very case. The application to quash the search warrants was made to
Turnbull J. of the New Brunswick Court of Queen's Bench. No procedure for
such an application is prescribed in the Income Tax Act. In
dealing with the application, the judge applied the procedure applicable on a
motion to a judge of that court. The propriety of so doing is not contested.
The rule that a judge may review an ex parte order is itself a
rule inhering in a superior court judge of the province, and is often the
subject of a specific rule of procedure. For an example one may refer to R.
37.14 of the Ontario Rules of Civil Procedure, O. Reg. 560/84.
It would be anomalous if provincial procedure applied in first instance but
ceased to apply thereafter. I know of no constitutional principle which would
distinguish between proceedings at first instance and appeal with respect to
the legislative jurisdiction over procedure.

Provincial
law of procedure is inapplicable only in respect of proceedings that are exclusively
criminal in nature. By virtue of s. 91(27) of theConstitution Act, 1867, Parliament is given exclusive legislative power over
criminal law and procedure. Matters arising out of a statute enacted
exclusively under the criminal law power must be dealt with under federal laws,
including laws of procedure. A recent example can be found in R. v.
Meltzer, [1989] 1 S.C.R. 1764. This Court held that no appeal
lay from the decision of a judge renewing a wiretap authorization. In so
doing, McIntyre J., for the Court, adopted the following passage from R. v. Cass (1985),
71 A.R. 248:

In my
view it cannot be argued that a wire tap authorization, or a review of it, or
an appeal from such a review, is anything other than a criminal matter.
Indeed, Parliament's authority in the field of interception of private
communications derives from its criminal law jurisdiction. An Alberta statute
or rule of court relating to civil matters purporting to govern an appeal from
the review of an authorization would be ultra vires. [Meltzer, at pp.
1769-70.]

Poje v.
A.G. for British Columbia, [1953] 1 S.C.R. 516, and In re Storgoff, [1945]
S.C.R. 526, contain further examples of proceedings that are exclusively
criminal in nature.

As
previously stated, a matter arising under a federal statute that is supportable
under another head of power in addition to the criminal law power can have two
aspects: one criminal and one civil. A provincial court which is seized of
the matter may validly apply its own rules of civil procedure unless resort
thereto is precluded by federal legislation or the matter is clearly related to
a criminal proceeding. This is particularly true of proceedings to review a
search warrant or other process issued under federal legislation that is
supportable under a head of power other than the criminal law power.

In General
Motors of Canada Ltd. v. City National Leasing, supra, this
Court found the Combines Investigation Act as a whole
supportable under the trade and commerce power as well as the criminal law
power. That Act contains provision for searches and seizures pursuant to
warrants to search. The sections authorizing the issue of search warrants were
found to violate s. 8 of theCharter in Hunter v. Southam
Inc., [1984] 2 S.C.R. 145, and were struck down. The
proceeding to review the warrant was by way of interlocutory injunction to a
judge of the Court of Queen's Bench of Alberta. The appeals were taken and
eventually reached this court. The proceedings by way of interlocutory
injunction and the appeal were taken in accordance with the procedure
applicable to civil proceedings in the Alberta Court of Queen's Bench and Court
of Appeal: see (1982), 68 C.C.C. (2d) 356, and (1983), 3 C.C.C. (3d) 497.

Similarly,
in Thomson Newspapers Ltd. v. Canada (Director of Investigation and
Research, Restrictive Trade Practices Commission), supra, the
proceeding to quash, onCharter grounds, orders issued under s. 17 of
the Combines Investigation Act for the attendance
of witnesses and production of documents could not have reached this Court but
for the provisions of the Ontario Courts of Justice Act, 1984, S.O.
1984, c. 11, and the Ontario Rules of Civil Procedure.

A
motion to review the issuance of a search warrant, like a prerogative
proceeding, takes its character from earlier proceedings out of which it
arises. In Storgoff, supra,
Kellock J. stated, at pp. 585-86 and 588:

In my opinion, all the members of the Court approach
the matter first from the standpoint of the situation with regard to the nature
of certiorari as it was understood before the Judicature
Acts were passed, and they determine that its nature depends
upon the character of the earlier proceedings to which the proceeding by way of certiorari is
directed.

.
. .

In my
opinion, all these authorities are based on the view that habeas
corpus, being procedural, partakes of the nature of the
earlier proceeding, as a result of which it has been invoked, and that this
view of its nature is not dependent upon anything enacted in England by the Judicature
Acts but was well recognized long before their enactment.

I
have explained above that in my opinion the provision out of which this
proceeding arises has both a civil and criminal aspect. The motion for review
cannot therefore be characterized as exclusively criminal for the purpose of
determining rights of appeal. This is particularly so in view of the fact that
no charges have been laid and indeed may not be laid. The main purpose of the
application is stated in the Notice of Application as follows:

5. The
Applicants seek the order for return of the documents and things that were
seized from the Applicants and from Thorne Riddell on July 7, 1986 and July 23,
1986, respectively, and all extracts therefrom, on the following grounds . . .
.

There
is nothing therefore in the nature of the application itself to convert the
proceeding into an exclusively criminal proceeding.

Finally,
I am concerned that, contrary to the views expressed by my colleague, the
appellants and others in the same position will find themselves without a
remedy. If the matter should proceed to trial (assuming charges are laid), it
is doubtful that the trial judge would have jurisdiction to set aside an order
of a superior court judge. In New Brunswick, the trial would be before a
provincial court judge. The applicant would be faced with this Court's
decision in Wilson v. The Queen, [1983] S.C.R.
594, which precludes a collateral attack on an order made by a court having
jurisdiction to make it. The application of this principle to an attempt to
review a search warrant at trial is illustrated by the case of R. v.
Komadowski (1986), 27 C.C.C. (3d) 319 (leave to appeal to the
Supreme Court of Canada denied, [1986] 1 S.C.R. x). O'Sullivan J.A. stated, at
p. 325:

Since
the search was conducted under a search warrant, which is valid on its face and
which has not been quashed or set aside in a proceeding directly attacking it,
the search warrant should be upheld.

He
dismissed an appeal from the trial judge who refused to reject evidence
obtained as a result of the execution of a search warrant which was attacked at
trial by the appellant.

Although Wilson, supra, may
have no application where the attack on a previous order is based onCharter
grounds, it presents grave difficulties for an applicant who seeks to attack a
search warrant on traditional grounds for the first time at trial. Apart from Wilson, it has
been suggested that where the purpose of the motion is to obtain the property
seized and not a rejection of the evidence obtained, the trial judge may not be
the appropriate forum. See Re Zevallos and The Queen (1987), 37 C.C.C.
(3d) 79, at pp. 86-87.

Furthermore,
if ss. 490(7), (10) and (17) of theCriminal Code,
R.S.C., 1985, c. C-46, have any application to a seizure under the Income Tax
Act, they have no application where it is alleged that the search is
unlawful and it is sought to prevent or terminate the search.

On
the other hand, if the matter does not go to trial, I fail to see how an action
for damages could be pursued grounded on conduct of the authorities pursuant to
an order of the superior court which had not been set aside.

I
would therefore allow the appeal and remit the matter to the Court of Appeal to
hear the appeal on its merits.